Should You Get an Extended Warranty for Your Car?
Some car buyers want extra protection, but these plans aren’t for everyone
Car buyers crave reliability: 95 percent of new- and used-car shoppers rank it high when choosing a car, according to a national survey conducted by Consumer Reports. But for many shoppers, even knowing which cars are trustworthy isn’t enough. They want protection.
Vehicle service contracts, often referred to as extended warranties, are a tempting option for consumers who buy a used car or for those who want to extend the bumper-to-bumper coverage on a new car.
No matter the exact type, extended warranties are an investment in peace of mind that limits financial risk for a set period of time. But beware: A CR member survey conducted in 2013 showed that car owners typically paid more for the coverage than they got back in direct benefits. This isn’t surprising, because extended warranties make a lot of money for those who sell them.
“The fact is, extended warranties are overpriced. That’s the reason people sell them, because they make a bundle on them in commissions,” says a money expert and radio talk show host, Dave Ramsey. “I don’t recommend buying extended warranties, ever. If you can’t afford to repair your car, then you can’t afford the car.”
Editor’s Note: This article has been updated since it first published on Dec. 27, 2018, in the February 2019 issue of Consumer Reports magazine.